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17 December 2019 06:34

Dan Coats Donald Trump John Ratcliffe

Mormon Church has misled members on $100 billion tax-exempt investment fund, whistleblower alleges

A former investment manager alleges in a whistleblower complaint to the Internal Revenue Service that the Church of Jesus Christ of Latter-day Saints has amassed about $100 billion in accounts intended for charitable purposes, according to a copy of the complaint obtained by The Washington Post. The confidential document, received by the IRS on Nov. 21, accuses church leaders of misleading members — and possibly breaching federal tax rules — by stockpiling their surplus donations instead of using them for charitable works. Nielsen, a 41-year-old Mormon who worked until September as a senior portfolio manager at the church's investment division, a company named Ensign Peak Advisors that is based near the church's headquarters. In a declaration signed under penalty of perjury, Nielsen urges the IRS to strip the nonprofit of its tax-exempt status and alleges that Ensign could owe billions in taxes. While about $6 billion of that income is used to cover annual operating costs, the remaining $1 billion or so is transferred to Ensign, which plows some into an investment portfolio to generate returns, according to the complaint.

The church also owns real estate worth billions of dollars, according to the complaint, which focuses on surplus tithing money and says that the church may have additional holdings not managed by Ensign. While accumulating this wealth, Ensign has not directly funded any religious, educational or charitable activities in 22 years, the complaint said. Philip Hackney, a former IRS official who teaches tax law at the University of Pittsburgh, said the complaint raised a "legitimate concern" about whether the church's investment arm deserved its tax-exempt status. According to Nielsen, $2 billion from Ensign has been used over the past decade to bail out a church-run insurance company and a shopping mall in Salt Lake City that was a joint venture between the church and a major real estate company. The complaint filed by Nielsen comprised a signed Form 211, the formal piece of IRS paperwork for reporting tax avoidance, a notarized cover letter to officials, plus the 74-page narrative document co-written with his brother in which he detailed his allegations at length.

Nielsen told Ensign in a resignation letter dated Aug. 29 that his employment had become unworkable after his wife and children left the Mormon Church and asked him to follow them, according to a copy of the letter provided by Lars Nielsen. Nielsen, a 41-year-old Mormon who until September worked at Ensign Peak Advisors, the investment division of the church, offers a glimpse into the finances of the church, which has not publicly disclosed its financial statements in the United States since 1959, per the Salt Lake Tribune. By the numbers: Nielsen's complaint estimates the church collects $7 billion in annual contributions, $6 billion of which covers yearly operations costs, while the remaining $1 billion goes to Ensign Peak Advisors for he church's investment portfolio. "Based on internal accounting documents from February 2018, the complaint estimates the portfolio has grown in value from $12 billion in 1997, when Ensign was formed, to about $100 billion today," WashPost notes. On Monday, the Washington Post reported that a former investment manager with the Church of Jesus Christ of Latter-day Saints has filed a whistleblower complaint with the IRS, accusing the Church of misleading both federal tax agents and their congregants about a set of accounts collectively worth $100 billion.

David Nielsen, himself a Mormon, worked at Ensign Peak Advisors, the investment division of the church, prior to filing the complaint. He is urging the IRS to strip the Church of its nonprofit status and fine the organization for misusing charitable funds — and in accordance with IRS whistleblower rules, is seeking a reward based on the proceeds from collecting the unpaid taxes. He also claims the church, which collects $7 billion from worshipers annually and has gigantic real estate holdings, has not directly put the funds from Ensign toward any religious, educational or charitable activities in over two decades. "Having seen tens of billions in contributions and scores more in investment returns come in, and having seen nothing except two unlawful distributions to for-profit concerns go out, he was dejected beyond words, and so was I," wrote Nielsen's brother Lars in a statement to the Post. University of Pittsburgh law professor and former IRS counsel official Philip Hackney, agreed that the complaint showed a "legitimate concern," saying, "If you have a charity that simply amasses a war chest year after year, and does not spend any money for charity purposes, that does not meet the requirements of tax law." LDS spokesman Eric Hawkins declined to give details on the matter, saying, "The Church does not provide information about specific transactions or financial decisions." A whistleblower complaint to the IRS accuses The Church of Jesus Christ of Latter-day Saints of building a $100 billion investment portfolio using donations intended for charitable purposes, potentially in violation of federal tax laws, according to a Monday report published by The Washington Post.

The complaint was filed by David Nielsen, a former portfolio manager for the church's nonprofit investment arm Ensign Peak Advisors, with the help of his brother Lars Nielsen, who spoke with and provided supporting documents to The Post. "In a declaration signed under penalty of perjury, Nielsen urges the IRS to strip the nonprofit of its tax-exempt status and alleges that Ensign could owe billions in taxes," The Post reports. According to The Post, Nielsen's complaint describes the church collecting roughly $7 billion in member contributions each year. Of that amount, the complaint alleges, $6 billion is spent on operating costs while the remaining $1 billion is transferred to Ensign Peak Advisors and added to the church's investment portfolio. Nielsen said Ensign did not use the money for charitable purposes in the past 22 years, but had twice used the money to prop up businesses, once for an insurance company and the second time for the City Creek Center mall in Salt Lake City.

Nielsen's complaint also says the church may have additional holdings outside the management of Ensign Peak Advisors. The Post reported that the letter, according to a copy provided by Lars Nielsen, said, "his employment had become unworkable after his wife and children left the Mormon church and asked him to follow them." Lars Nielsen told The Tribune late Monday that his brother asked him to write an "expose fully detailing everything he knew about Ensign Peak Advisors," which turned into the 74-page document submitted with the complaint.